If finalized, the deal will solve Cascade's critical shortage of capital, depleted by the region's housing crash. "We are pleased that, after closing of the transactions contemplated by the Securities Purchase Agreements, our capital ratios will notably exceed regulatory agency benchmarks for a 'well-capitalized' bank," said Patty Moss, the bank's chief executive.

The implosion of the housing market proved fatal for Bend's two other major local financial institutions, Community First Bank and Columbia River Bank, which was based in The Dalles but had built a major Central Oregon presence. Both were closed earlier this year by state and federal regulators.

Cascade's good fortune does not mean that other Oregon banks are out of the woods, however. Ken Roberts, a Portland attorney who works with a number of regional banks, said the economy remains too difficult for there to be some universal recovery.

Besides Cascade, six Oregon banks are operating under consent orders from regulators to bring in additional capital or otherwise get their houses in order. Cascade's Moss, who fought tirelessly to save the bank, said the deal does bode well for her peers.

"I think that the market has improved for private equity investing in banks in general," Moss said. "The economy has stabilized and the overall market has improved. I think that's a good harbinger for community banks."

Cascade was once widely recognized as one of the strongest, best-managed banks based in Oregon. It's stock hovered around $25-$30 a share for much of 2006 and 2007. But the recession punished Cascade's investors, driving the stock down to a low of 42 cents a share in July.

The stock soared 57 percent Wednesday, closing at 71 cents a share.

The bank has been working on the recapitalization deal for about 18 months. Lightyear and Bolger reached tentative agreement in November 2009 to invest $40 million and $15 million, respectively. Leonard Green and WL Ross came into the picture last spring.

Since then, Cascade has repeatedly set deadlines for closing the deal, only to extend the deadline after failing to work out the deal's fine points.

Now, the transaction is tentatively final. Lightyear and the other outside investors bought their shares at 40 cents a share. Upon completion, Lightyear, WL Ross and Leonard Green will each own 24.35 percent of the bank's stock. Bolger will personally own another 14.01 percent.

Lightyear, Leonard Green, and WL Ross will have one representative joining Cascade Bancorp's board of directors. Bolger already has a representative on the board.

Don Marron, CEO and founder of New York-based Lightyear, led the investor group. Lightyear is a private equity fund that invests only in financial services industry deals. Cascade was one of 250 banks around the country that Lightyear considered backing after the economic crash pushed the industry to the financial edge.

"We got to Bend to do our due diligence and we thought 'this is a great bank,'" Marron said. "It got in a jam because of land loans and other things. But it's in a terrific part of the world. We see it as a great opportunity."

The company intends to effect a 1-for-10 stock reverse stock split on Monday, reducing the number of shares outstanding from 28.5 million to 2.85 million.

Moss thanked the bank's customers for standing by the bank through the years of uncertainty.

She also said the bank's return to health will be a positive development for Central Oregon's battered economy. The arrival of other banks in the area to take over the failed Community First and Columbia River organizations have not filled the capital vacuum created by the local banks' collective financial problems.

"We're the number one business lender in Central Oregon, and there's no substitute for that," Moss said. "This will provide more access to credit for Central Oregonians."